Hi there.
I've been looking into the difference between ETFs and individual stocks here in Ireland.
From my, albeit rudimentary, understanding, when individual stocks are sold you're liable to 33% CGT on any gains above the €1,270 allowance. With ETF's however, you're liable for 41% on any gains with no allowance and you're liable to deemed disposal whereby you'll be charged 41% on the gains after 8 years even if you haven't sold.
Assuming the above is correct, the question I have is, if I'm interested in tracking the S&P 500, what's stopping me from buying the stocks that make up the S&P 500 individually and saving myself 8% tax and avoiding the deemed disposal rule?
I'm not looking to fanatically follow the S&P 500 to a tee so even if you bought the top 50 (or 100 stocks) of the S&P 500 individually on a trading app, you'd be tracking the bulk. Sure it's up front work but once you've got your allotment it's just a case of logging into an app and buying more.
Am I missing something blatantly obvious? Fees per trade or something? From where I'm standing at the moment it feels like the ETF tax rate is a means of hoodwinking people into investing 'stress free' but at a higher rate of rate of tax.
Any and all insight would be greatly appreciated.
I've been looking into the difference between ETFs and individual stocks here in Ireland.
From my, albeit rudimentary, understanding, when individual stocks are sold you're liable to 33% CGT on any gains above the €1,270 allowance. With ETF's however, you're liable for 41% on any gains with no allowance and you're liable to deemed disposal whereby you'll be charged 41% on the gains after 8 years even if you haven't sold.
Assuming the above is correct, the question I have is, if I'm interested in tracking the S&P 500, what's stopping me from buying the stocks that make up the S&P 500 individually and saving myself 8% tax and avoiding the deemed disposal rule?
I'm not looking to fanatically follow the S&P 500 to a tee so even if you bought the top 50 (or 100 stocks) of the S&P 500 individually on a trading app, you'd be tracking the bulk. Sure it's up front work but once you've got your allotment it's just a case of logging into an app and buying more.
Am I missing something blatantly obvious? Fees per trade or something? From where I'm standing at the moment it feels like the ETF tax rate is a means of hoodwinking people into investing 'stress free' but at a higher rate of rate of tax.
Any and all insight would be greatly appreciated.